US elections: uncertainty for trade relations with Canada

US elections: uncertainty for trade relations with Canada
US elections: uncertainty for trade relations with Canada

Although Vice President Kamala Harris and former President Donald Trump approach trade differently, both are selling protectionist policies that could cause uncertainty for Canada.

“We’ve done this before,” Prime Minister Justin Trudeau said recently, when asked about the two presidential candidates who said they would push for a review of the crucial trade deal.

“We can do it again if we need to.”

Ms. Harris campaigned to vote against the trilateral agreement and made comments in support of the Biden administration’s “Buy American” procurement rules.

Meanwhile, Mr. Trump’s avowed taste for tariffs is the centerpiece of his agenda. He has already proposed a general rate of 10%, increasing it to more than 50% in recent interviews.

“For me, the most beautiful word in the dictionary is ‘tariff,’” Mr. Trump said on Tuesday.

This rhetoric is ringing alarm bells north of the border. More than 77% of Canadian exports go to the United States and 60% of Canada’s gross domestic product comes from trade.

The Canadian Chamber of Commerce released a report earlier this month suggesting that Donald Trump’s 10% tariffs would reduce the size of the economy by between 0.9 and 1%, resulting in economic costs of approximately $30 billion per year. Things would be even worse if other countries retaliated by imposing their own tariff barriers.

Lessons from Trump’s first presidency

Mr. Trump’s first administration demonstrated how vulnerable Canada is to the whims of the United States, when the former president abandoned the North American Free Trade Agreement (NAFTA).

The negotiation of CUSMA, commonly nicknamed “the new NAFTA”, was a key test for Ottawa after Mr. Trump’s victory.

Deputy Prime Minister Chrystia Freeland called the updated trilateral pact “a victory for all Canadians,” and experts say it was more moderate than Mr. Trump initially promised.

However, Mr. Trump’s trade representative, Robert Lighthizer, has written critically about the renegotiation, writing in his book that at one point “NAFTA was hanging by a thread.”

“With Trump in charge, he’s definitely a very unstable individual,” said Laura Dawson, an expert on Canada-US relations and executive director of the Future Borders Coalition.

“And its impact on global stability and security and on international relations with the United States is going to be significant – and not in a good way.”

Laura Dawson, expert on Canada-US relations and executive director of the Future Borders Coalition

Canada has learned lessons from its first presidency. Mr. Trump followed a fairly orthodox Republican trade program, punctuated by explosive personal stunts, Ms. Dawson detailed. He gave most of the responsibility for business dealings to Mr. Lighthizer, who was more predictable.

Alec Beck, the fifth congressional district chairman of the Minnesota Republican Party, said he thinks talk of Mr. Trump being an isolationist is overblown. Mr. Beck, whose state shares an 885-kilometre border with Canada, said the two countries need to work together and that tariffs are a bad idea.

Nationalist and protectionist actions to expect from Harris

If Ms. Harris wins, relations will be more normal, based on established patterns and rules, said Aaron Ettinger, a politics professor at Carleton University in Ottawa.

The vice president is expected to follow the path set by President Joe Biden, who has brought some stability but not much change. He has largely kept Mr. Trump’s tariffs in place, despite promises to reverse them.

Mr. Biden also signed an executive order to revoke the permit for the Keystone XL pipeline, which would have transferred oil from Alberta to Nebraska.

Ms Dawson said she expected a Harris administration to continue nationalist and protectionist actions.

Ms. Harris campaigned on bringing manufacturing jobs back to the United States. It’s a great slogan, Ms. Dawson said, “but it’s terrible if you’re Canada.”

The impact of these policies on Canada-US relations may not be clear to voters, who support America First slogans.

Experts have warned that trade and tariff threats will also carry costs for Americans.

At a cabinet retreat in August, Ms. Dawson warned Mr. Trudeau’s team that, whoever wins the U.S. presidency, Canada will have to work harder to maintain existing advantages in labor integration. trade and travel.

Canada will rely more on ad hoc lobbying and advocacy to gain special treatment as Republicans and Democrats move away from the security of historic trade deals.

Experts and business groups have sounded the alarm about Canada’s changing role toward its closest ally. Many argue that the relationship between the two countries has moved from a strategic relationship to a transactional relationship, with Canada becoming less critical compared to other places in the world.

A report by the Expert Group on Canada-US Relations, which includes former diplomats, political advisers and business leaders, has warned that Ottawa is “sleepwalking” as it nears a review of the Canada-US trade deal. 2026. That July report described Mr. Trump’s current relationship with the Liberal government as “cold at best.”

Ms. Dawson argued that Canadian concerns will not be allayed in the coming weeks before the election. We will have to wait until long after November to find out what either side really has in store for the Canadian relationship.

“I am much more concerned about the trajectory that we will follow, about the falling dominoes that will occur through this new revision of NAFTA.”

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